financetom
Economy
financetom
/
Economy
/
Minutes of Fed's May meeting likely to show officials grappling with uncertainty
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Minutes of Fed's May meeting likely to show officials grappling with uncertainty
May 28, 2025 3:25 AM

WASHINGTON (Reuters) -The U.S. Federal Reserve at its May 6-7 meeting undercut expectations that it would change its policy interest rate anytime soon, and minutes from that session released on Wednesday may show just how firmly policymakers are holding onto their current wait-and-see approach.

The minutes will be released at 2 p.m. EDT (1800 GMT) and in key ways have been superseded by developments since then. The meeting took place when concern over the economic fallout from changes in global trade and tariff policy was intense, stoked by President Donald Trump's announcement in early April of massive new import taxes.

A week later the most aggressive of the new tariffs had either been lowered or postponed in announcements by Trump that reduced pressures that had been driving bond yields sharply higher, buoyed a sinking stock market, and led analysts who regarded a U.S. recession as a near certainty in a high-tariff world to upgrade their growth forecasts.

Still, the minutes are likely to show policymakers wrestling as much with uncertainty as with the negative outlook from early May, and the erratic nature of administration policymaking - Trump from this past Friday to Sunday announced then postponed steep new taxes on European imports - hasn't changed.

"I've been describing this as driving through fog," Richmond Fed President Tom Barkin said Tuesday on Bloomberg Television. "It's just very hard."

Barkin said that data for the year so far shows the economy on the same path as it has been, with reasonably low unemployment and inflation easing to the Fed's 2% target.

But there are competing narratives, he and other policymakers say, that see a new jump in inflation in coming months as tariffs take hold, or rising joblessness as widespread uncertainty and rising costs fuel a slowdown, or even a toxic combination of both.

Until it is clear which way the economy pivots under the influence of shifting global trade rules, the Fed has little reason to alter the 4.25% to 4.50% policy interest rate it has maintained since December.

"Published data shows an economy very much on the same trajectory that we've been on for the last year or two. Low unemployment, inflation settling toward target," Barkin said.

"I could describe how some of these forces, like tariffs, might be inflationary. I can describe how other forces, like lower gas prices, might be disinflationary," he said. "Less government spending might be less employment...People who haven't hired for 18 months, if spending continues, might need to start hiring. So I'm waiting to see what happens."

Fed staff have been trying to estimate the likely impact of different tariff rules in a series of studies that may get mention in the minutes if they were presented to policymakers as part of the discussion around the economic outlook.

But even those reports are contingent on the assumptions made about final tariff levels, something likely to remain unknown at least until July when a 90-day reprieve on the stiffest import taxes expires. Market optimism about the final outcome of the trade debate has been based on an expectation that negotiated deals with lower levies will by then have been approved.

Even then it may take months more for the Fed to know how the economy is responding. Investors now anticipate the Fed holding the policy rate steady at the June and July meetings, but cutting a quarter point in September and again in December.

"Until we know more about how this is going to settle out and what the economic implications are for employment and for inflation, I couldn't confidently say that I know what the appropriate path will be," Powell said at a May 7 press conference at the end of the Fed's meeting.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
6 key ways the Federal Reserve impacts your money
6 key ways the Federal Reserve impacts your money
May 26, 2025
Key takeaways The Federal Reserve's interest-rate decisions have a wide-ranging influence on your personal finances, affecting more than just your financing costs but also your job security and purchasing power. When the Fed's key interest rate falls (or rises), the borrowing costs you pay also follow suit, influencing the cost of financing purchases with credit cards, car loans, personal loans...
Conservative leader Merz set to become Germany's chancellor
Conservative leader Merz set to become Germany's chancellor
May 26, 2025
BERLIN (Reuters) - Conservative Friedrich Merz is set to be sworn in on Tuesday as Germany's new chancellor at a critical juncture as the economy battles its longest post-war downturn, relations with top security ally the United States fray and the far-right surges. Lawmakers are widely expected to back Merz as chancellor in a vote in the lower house of...
House committee proposes changes to boost US oil, coal on federal lands
House committee proposes changes to boost US oil, coal on federal lands
May 26, 2025
(Reuters) -A House of Representatives panel this week will consider sweeping changes to the nation's oil and gas drilling programs, including requiring dozens of lease sales in the Gulf of Mexico and Alaska, that could be passed in an impending budget bill. WHY IT MATTERS The proposal is designed to bolster President Donald Trump's goal to increase U.S. fossil fuel...
Bill Ackman Says Inflation Has 'Largely Been Wrung Out,' Pushes For Temporary Pause On China Tariffs To Shield US Businesses
Bill Ackman Says Inflation Has 'Largely Been Wrung Out,' Pushes For Temporary Pause On China Tariffs To Shield US Businesses
May 26, 2025
Billionaire investor Bill Ackman believes inflation has largely been “wrung out of the economy” and predicts global economic conflicts could resolve within six to nine months, while advocating for a temporary pause on China tariffs to protect U.S. businesses. What Happened: The Pershing Square Capital Management CEO told CNBC that declining energy and food prices signal positive economic trends. “The...
Copyright 2023-2025 - www.financetom.com All Rights Reserved